SIPES HOUSTON CHAPTER
3242 Summerland Drive
Manvel, Texas, 77578
Chapter Officers 2020
Steve M Smith
Technical Program Chair
Public Relations Chair
Deal Buyers List Chair
Continuing Education Chair
In this issue
Letter From The Editor
SIPES Houston Board
Deal Buyers Event
E&P Companies are needed?!
SIPES Houston TWITTER
Geology on Mars
SIPES LinkedIn Page
True Cost of Solar in ND
Are You An Oil Man? Buy The HAT!
No More Wind!
Biden’s Plan Doesn’t Work
TX Power Report
Geologist for Hire
Oil to $80?
SIPES 2021 Conventon
JP Morgan 2021 Energy Outlook
LETTER FROM THE EDITOR
The demand for oil and gas is increasing rapidly with a dwindling supply. If anyone is still bearish on oil and gas, you should
change your mind.
In 2019 the average daily commercial flights were 188,000 per day. Today the average is 5,500, increasing each week. The US production of oil is at 10 million BOPD. 7.9 million BO were drawn down for the week ending in April 30th. But “experts” predicted a 2 million BO draw down. That is a huge difference. What happens when the world comes back to life? America is leading in vaccines. If you don’t have yours, I encourage you to do so.
SIPES Houston will be hosting an invite-only prospect show on June 17th at 2PM. Prospects will be reviewed by the Houston Board before allowed to be presented at the event. If you have a prospect please send it to me to be added to the list.
If you are a SIPES member, have been laid off, or looking for a new job, you are welcome to utilize this newsletter to help you in your goals. Please see page 16 for an example.
Stay lean, stay hungry,
SIPES HOUSTON BOARD
Jeff Allen (not pictured)
Godswill Nwankwo (not pictured)
Barry Rava (not pictured)
The April 2021 Luncheon at the Petroleum Club of Houston was a big success. Luckily, we had two amazing women to educate our members on what ESG is and it is not. The discussion was exciting and educational for both speakers and attendees.
The speakers were:
This image of geology on Mars is from NASA. To see more click HERE
For all of the true geologists out there: What does this look like to you? What environment could this be telling us of Mars at that time? Can you think of any outcrop on Earth similar to this?
The True Cost of Solar in N. Dakota
In a document submitted to the North Dakota Public Service Commission (PSC), the equivalent of Minnesota’s Public Utilities Commission (PUC), the electric company admitted that its plan to spend $475 million building a massive 460 megawatt (MW) solar facility is not the lowest cost option available.
Those of us who have been paying attention already knew this, but it is incredibly gratifying that Xcel Energy was forced to tell the truth about the cost of solar in North Dakota because the Peace Garden State requires the company to disregard Minnesota’s renewable energy preferences when the company is planning which types of power plants it will build.
In fact, Xcel admits to the North Dakota PSC that they are only building solar panels because of (bad) energy policies in Minnesota. Xcel’s documents say:
The Company is pursuing Sherco Solar to fill this capacity need consistent with the selection of solar resources pursuant to our most recent IRP Preferred Plan, which is a Minnesota-based resource planning analysis.
Further, the development of solar resources at the Sherco site in Becker, Minnesota advances Minnesota state clean energy policy goals by meeting the state’s preference for renewable energy resources, and helping meet the state’s greenhouse gas emissions targets, Renewable Energy Standard (RES), and Solar Energy Standard (SES).
Additionally, the Sherco Solar Project was initially proposed in response to the Minnesota Public Utilities Commission’s (MPUC) investigation to identify investments that utilities could undertake to support economic relief and recovery in the wake of the COVID-19 pandemic. Xcel Energy thus fully acknowledges that this resource addition is driven by Minnesota policy priorities (emphasis added).
Xcel is only building solar panels because of government mandates in Minnesota. If not for these mandates, then the lowest cost source of electricity generating capacity would be a natural gas power plant. The company elaborates:
The Company further recognizes that the selection of a solar resource to meet this capacity need is not consistent with North Dakota planning priorities. Specifically, when externality values are excluded from the modeling, as required under North Dakota law, Sherco Solar is not the least cost option for filling the identified capacity needed in 2026. Rather, the “North Dakota Plan” resource planning analysis in our most recent IRP selected a dispatchable resource, modeled as a greenfield combustion turbine (CT), to meet the identified capacity need.
What this says, in layman’s terms, is that Xcel is foolishly planning to shut down its coal plants at the Sherburne County generating station a decade before the end of their useful lifetime, and as a result, the company will not have enough power plants online to meet electricity demand, unless they build more new power plants.
Under North Dakota law, Xcel isn’t allowed to fudge the numbers by adding in theoretical costs for emitting carbon dioxide, as it does with reckless abandon in Minnesota. As a result, Xcel actually has to come clean about the true cost of solar in North Dakota, where they are actively encouraged not to disclose these costs in Minnesota.
In fact, Xcel Energy lobbied for the highest “cost” for each ton of carbon dioxide emitted so they could artificially make wind and solar look cheaper than coal and natural gas, on paper.
It’s also important to remember that Xcel Energy’s Sherco solar facility won’t produce any electricity at night, meaning the company may very well not have enough reliable power plants online to generate electricity on cold winter nights even after building the solar facility. This will require a natural gas plant to be built in order to keep the lights on and our furnaces running.
In North Dakota, they understand this. In Minnesota, they prefer to pretend the world doesn’t work this way.
“Electrify Everything” is Regressive
Respect the home-rule rights of counties and towns that don’t want renewable energy projects in their jurisdictions.
Many local governments have been successful in fending off large-scale renewable projects by enacting measures that limit the height of the projects, as well as their proximity to nonparticipating land- owners, homes, and other structures. They have also enacted noise restrictions. In response, some states are attempting to override local jurisdictions that have passed measures designed to protect local landowners from the encroachment of renew- able energy projects. These local laws should be respected.
End the lavish tax incentives given to wind and solar energy: The production tax credit and investment tax credit.
Between 2010 and 2029, federal tax incentives for wind and solar will total $140.3 billion. Those subsidies are encouraging renewable energy developers to push for deployment of projects in rural areas that don’t want them. Furthermore, the incentives for wind and solar are far greater, on both an absolute and energy-equivalent basis, than those given to hydrocarbons. The tax credits also distort wholesale power markets and, when combined with renewable energy mandates, result in increased electricity prices for consumers. It is time to end these giveaways.
If reducing carbon dioxide emissions is the goal, policymakers must consider the options that are scalable, affordable, and have small footprints.
There is no viable pathway toward running our economy solely on renewables. Therefore, policymakers must be considering the energy sources that are low- or no-carbon, and are affordable and scalable. That means using more natural gas and nuclear energy.
The negative health impacts of noise from wind turbines can no longer be ignored.
Numerous health studies have found that humans are sensitive to the noise produced by wind turbines. Given those findings, regulators must assure that wind projects are located far enough from homes and businesses to prevent negative health impacts. That means adopting proper setbacks and/or requiring wind energy developers to buy out nearby landowners who are affected by turbine noise.
Bidens’ Plan Doesn’t Work
At his international climate summit last week, President Joe Biden vowed to cut U.S. greenhouse gas emissions in half by 2030. The goal will require sweeping changes in the power generation, transportation and manufacturing sectors. It will also require a tremendous amount of land.
Wind farms, solar installations and other forms of clean power take up far more space on a per-watt basis than their fossil-fuel-burning brethren. A 200-megawatt wind farm, for instance, might require spreading turbines over 19 square miles (49 square kilometers). A natural-gas power plant with that same generating capacity could fit onto a single city block.
Achieving Biden’s goal will require aggressively building more wind and solar farms, in many cases combined with giant batteries. To fulfill his vision of an emission-free grid by 2035, the U.S. needs to increase its carbon-free capacity by at least 150%. Expanding wind and solar by 10% annually until 2030 would require a chunk of land equal to the state of South Dakota, according to Bloomberg and Princeton University estimates. By 2050, when Biden wants the entire economy to be carbon free, the U.S. will need up to four additional South Dakotas to develop enough clean power to run all the electric vehicles, factories and more.
Texas Power Report
In short, pinpointing the full causes of these failures is ongoing. ERCOT’s report is too brief to provide suﬀicient guidance for new policy.
The report unhelpfully bundles all generation forms together and measures outages by deviations from a plant’s maximum output. A more useful report would give us the deviation from its rated output potential in the winter season. In other words, we want to know how “unusual” a plant’s performance was during the cold snap.
For example, ERCOT acknowledges that wind and solar output “is typically much lower than the specified nameplate capacity” so the outages reported are “much higher than the actual amount of power that would have been available.” It is also true that the more “reliably unreliable” a generation source is, the more backup capacity is required to keep the system operating during extreme events.
So, even though gas generation exceeded that of a “normal” winter day, it still fell short of what was needed during extreme weather.
Finally, a major breakdown in market design went unmentioned in the report. ERCOT’s scarcity pricing incentives did not convince generators to deliver power when Texans needed it. Something like two-thirds of the outages were due to preventable problems, mainly equipment that stopped working because of the cold.
The way Texas addresses such problems now is by allowing generators to sell power for as much as $9,000 per megawatt when blackouts are used to force load reductions. This compares to normal rates of $25/MW.
This add-on incentive is meant to encourage generators to keep emergency “operating reserves” available. Evidently, $9,000/MW was not enough to convince plant owners to harden their plants for tough conditions, or even to convince them to store backup fuel.
The legislature could improve those incentives by tweaking market design.
Policymakers should require plant owners to nominate “operating reserve” capacity in advance. Only “nominated” capacity would get the add-on payment when it is called upon in an emergency. That enticement should be bundled with a penalty: Firms with nominated reserve capacity should be charged $9,000/MWh if their plant is unavailable when called on.
Such a mechanism would strengthen incentives to weatherize and maintain resilient plants that can supply power on short notice. Our suggestion would be for legislators to set the parameters—incentives and penalties—but leave it to firms to figure out the technical details of hardening their operations.
The Berkshire Hathaway Energy proposal for additional gas-fired power generation misses the mark, since installed capacity was not an issue, operable capacity was. But the state’s gas-fired generators may want to explore Berkshire’s proposal to co-locate gas storage near power plants.
We hope Texas legislators now taking action on the freeze will seek more details before finalizing laws under consideration. The serious failures in February should not be treated as a political issue. At a minimum, lawmakers need data on peak gas availability for simultaneous spikes in heating and power demand, along with weather related outages by generation type, and how much those outages deviated from seasonal norms.
This information should point to the true causes—and remedies—worthy of their attention.
This post originally appeared in the Forbes blog on April 9, 2021
Geologist for Hire
SIPES Members are welcome to post a job application or resume in the newsletter for free. SIPES is always ready to help our members.
2021 SIPES CONVENTION
The annual SIPES Convention offers a great opportunity to connect and reconnect with like-minded people. Who are these like-minded people? They are your peers – independent prospect generators, geological, geophysical, and engineering consultants; and some are investors. The convention is centered around two mornings of technical talks, followed by interesting and fun activities focusing on the uniqueness of the area. The technical talks can be used to satisfy Continuing Education requirements, including an ethics talk. The talks provide technological updates and news of innovations and solutions to interpretation, sales, and production problems of the independent community. The technical talks are of a more intimate nature than are those of large conventions. There is ample time for questions and explanations during the technical sessions and during networking events. The convention is usually held in the first half of the year in a tourist-friendly venue. There are optional tours offered for your significant other!
SIPES Book Recommendation
The New York Times-bestselling “skeptical environmentalist” argues that panic over climate change is causing more harm than good. Hurricanes batter our coasts. Wildfires rage across the American West. Glaciers collapse in the Artic. Politicians, activists, and the media espouse a common message: climate change is destroying the planet, and we must take drastic action immediately to stop it. Children panic about their future, and adults wonder if it is even ethical to bring new life into the world.
Enough, argues bestselling author Bjorn Lomborg. Climate change is real, but it’s not the apocalyptic threat that we’ve been told it is. Projections of Earth’s imminent demise are based on bad science and even worse economics. In panic, world leaders have committed to wildly expensive but largely ineffective policies that hamper growth and crowd out more pressing investments in human capital, from immunization to education.
False Alarm will convince you that everything you think about climate change is wrong — and points the way toward making the world a vastly better, if slightly warmer, place for us all.